Hotel developers sue Convention Center as expansion plans launch

Voters could be asked this November to approve a hike in the hotel room tax to fund a more than $600 million expansion of San Diego’s bayfront convention center, Mayor Kevin Faulconer’s office said Wednesday.

Voters could be asked this November to approve a hike in the hotel room tax to fund a more than $600 million expansion of San Diego’s bayfront convention center, Mayor Kevin Faulconer’s office said Wednesday.

As Mayor Kevin Faulconer’s convention center ballot initiative kicked off Monday, one thing was missing from the plans — city control of the land where an expansion would occur.

In fact, developers of a luxury bayfront hotel proposed for the site have sued the San Diego Convention Center, accusing the city-owned nonprofit agency of interfering in their permitting process.

Fifth Avenue Landing, the company that controls the five acres along San Diego Bay where Faulconer wants to expand the city’s showcase meeting space, claims in the lawsuit that convention center officials are undermining plans for a 4-star, $300 million hotel.

“Plaintiff believes that defendant has been taking actions designed to prevent plaintiff from satisfying its contractual obligations,” states the suit, filed last month in San Diego Superior Court.

Faulconer’s November ballot initiative would raise hotel taxes to generate up to $685 million pay for an expanded convention center. Some of the new revenue would fund efforts to improve roads and reduce homelessness.

Faulconer spokesman Matt Awbrey said the ballot measure is the latest step in a yearslong quest to expand the convention center. More meeting space will help San Diego retain Comic-Con over coming years and attract other large events, he said.

“Securing funding while working toward a resolution on the property can happen concurrently, and is very common for large public projects,” Awbrey wrote in an email.

Convention Center officials declined to comment on the allegations, citing the ongoing litigation.

“It is our policy not to comment on legal matters,” spokeswoman Barbara Moreno wrote in an email. “Appreciate your understanding.”

The lawsuit, scheduled for an August hearing before Judge Joel R. Wohlfeil, raises the stakes in a deepening dispute between the Mayor’s Office and Fifth Avenue Landing partners Ray Carpenter and Art Engel.

Karen Frostrom, one of the Fifth Avenue Landing attorneys, said the mayor and convention officials had plenty of time to expand the center between 2010 and 2015, when they controlled the property under a sublease with Fifth Avenue.

She said the November vote proposal would help run out the clock on her client’s lease with the Port of San Diego, which expires in just over seven years.

“Our worry is that everybody is kind of lying in wait,” she said. “If they get it on the ballot, then they are just kind of timing out until 2024.”

Fifth Avenue Landing has held the lease next to the convention center for decades and first proposed a hotel on the property more than 10 years ago.

The company secured the required permits in 2007 but was unable to finance the project during the subsequent recession.

In 2010, Fifth Avenue Landing agreed to transfer its Port of San Diego leasehold to the convention center in exchange for interest payments and a $12.5 million balloon payment in 2015.

But the expansion effort stalled after a judge ruled that the hotel tax proposed by the city then was unconstitutional. The convention center defaulted and the lease, which reverted to Fifth Avenue Landing.

A condition in the 2015 amended lease required the company to submit hotel-development plans to the port within one year, a deadline the company met early last year.

Fifth Avenue Landing has now partnered with The Robert Green Co. to build a luxury hotel rising 44 floors above the bay.

The partnership, which has invested millions of dollars in the project to date, will seek an extension of up to 66 years once building permits are approved.

The lawsuit also accuses the Convention Center of mishandling a 2016 public-records request by allowing board member Stephen Cushman’s personal attorney to examine documents before they were released publicly — and by improperly withholding emails he sent or received on a private account.

“According to the California constitution, all people have the right to obtain the writings of public official(s) and agencies to serve the critical function of openness in government,” the suit says.

Allegations in the lawsuit stem from the convention center’s response to a records request Frostrom filed for her clients last year. The agency turned over thousands of pages of documents, but the Fifth Avenue Landing attorney thinks the most pertinent emails may have been withheld.

“We see a lot of emails from people to Cushman, and then he responds,” she said. “But we see no emails originating from his personal cushnet.net address. I have nothing that would show me what he initiated.”

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